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Are you investing in performance marketing for the right reasons?

4 minute read | May 2024

Campaigns rely on the seemingly delicate mix of brand and performance needed to maximize full-funnel visibility. Having analyzed hundreds of thousands of marketing mix decisions, we’ve seen the pendulum swing hard from brand to performance in recent years.

Consider that it was barely ten years ago that Binet and Field published The Long and the Short of it and proposed their famous 60:40 rule—that is, to maximize marketing effects and returns over time, 60% of a media budget should be allocated to brand marketing and 40% to performance marketing. Yet according to results from our 2024 Annual Marketing Report, 70% of marketers plan to increase performance marketing spend this year at the expense of brand building. What gives?

Short-term pressures

Companies today are under enormous pressure to deliver short-term results. Market conditions can change on a dime: a nimble new competitor entering the market; a new spike in inflation; geopolitical uncertainties; issues with the supply chain; or simply modern consumers being modern consumers and latching onto a new trend. It’s only natural for marketing leaders to want to capitalize on the opportunity right in front of them.

The logical choice then is to focus their efforts on the bottom of the funnel. There, they can target consumers near the moment of purchase, tailor their messages for immediate action and quickly see if their media spend is paying off. Between search, display, social, retail media, podcasts or even CTV, advertisers now have many more options to trigger short-term conversions than ever before. 

But there are two major pitfalls to watch out for:

  1. The first is to forget that when a shopper clicks on a Buy Now button, it’s the result of a long string of touchpoints with the brand, not just the last impression. Too many marketers still attribute sales to that last impression, for simplicity’s sake. This leads to a vicious circle where brands end up neglecting top-funnel activities to build their brand, and spending more to convert fewer prospects at the bottom of the funnel.
  2. The second is to assume that the long-term health of the company will take care of itself. In Binet and Field’s words, “Long-term effects are not simply an accumulation of short-term effects.” The same applies to outcomes. You won’t see long-term results by amassing short-term wins. What’s more, short-term pressure will only get more intense over time for companies that don’t invest in long-term effects.

Perceived effectiveness

There’s another possibility to consider: That today’s enthusiasm for performance marketing comes from the perception that channels typically used for it are inherently more effective.

Nielsen’s Annual Marketing Report shows that marketers deem social media, search and online display and video to be the most effective digital channels in their quiver. Nearly 80% of them perceive social media to be extremely or very effective, for instance, and 72% give the same appreciation to search. Marketers don’t typically associate TV with performance marketing. Yet, when we analyze how TV fares across hundreds of marketing mix modeling studies, we find that it’s one of the only channels that performs equally well at the top and bottom of the funnel.

The point is not to cast doubt on this or that channel or to put any of them on a pedestal. All campaigns and brands are different and every channel has its strengths and weaknesses. But it is important to recognize that there can be a wide gap between the perception of performance and actual performance. The fact that a channel is addressable, relatively easy to measure and perceived to be effective doesn’t automatically make it good for performance marketing.

Measurement drives strategy

When asking if you’re investing in performance marketing for the right reasons, you want to make sure budget decisions are informed by strategic considerations and not by what is feasible, or what you believe might be feasible.

That’s why holistic measurement is so critical. Most channels are strong in either performance or brand messaging, but rarely in both. And you can only determine the right mix of brand and performance for your marketing needs if you have a clear picture of your media effectiveness across the entire funnel. In today’s complex media ecosystem, cross-channel KPIs and measurement capabilities should be a top priority, yet only 38% of marketers measure traditional and digital marketing together. There’s clearly a lot of room for improvement.

An encouraging sign is that 77% of marketers interviewed for our 2024 Global Annual Marketing Survey are planning to increase spend on newer channels (like CTV and influencer marketing) this year. Experimenting with new channels is a great way to add new marketing capabilities and keep up with consumers—as long as they’re measured consistently with the rest of the marketing mix.

There’s a right mix of brand and performance for your business. Just make sure you base your decision on hard data and not just perceptions.

For more insights into how to maximize campaign spend across the marketing funnel, read Nielsen’s 2024 Annual Marketing Report. 

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